Will Congress get to the bottom of the executive pay problem?


As Jonathan Berr wrote on Friday, Former Merrill Lynch & Co. (NYSE: MER) Chief Executive Stan O'Neal, former Citigroup Inc. (NYSE: C) CEO Chuck Prince and former Countrywide Financial Corp. (NYSE: CFC) Angelo Moziilo will make their much-delayed appearance before Congress this week.

The topic of conversation will be their outrageous pay packages -- especially 8- and 9-figure severance packages -- and how they can justify packages that seems so blatantly excessive.

Here's the problem: executive compensation consultants generally present compensation committees with the pay packages that executives at companies of similar size in the same industry are earning. Here's the beauty of that: by that standard none of these guys is overpaid because all of them are overpaid! Isn't that beautiful?

If that sounds circular it is, but that's how executive pay has spiraled out of control. Hopefully, Congress will keep the focus on the raping of shareholders, and not make this into a sound-byte spectacle full of rah-rah populist rabble-rousing.

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